VERIZON STOCK UNDER PRESSURE AND NEARING KEY TECHNICAL SUPPORT

Verizon Communications stock is still sporting a long-term uptrend line despite its recent relative underperformance versus the broader market. Will it hold support at that line?Verizon Communications (NYSE: VZ) shareholders have had to endure flat performance this year even as the S&P 500 and Dow Jones Industrial Average have each posted respectable gains. This is clearly an example of a huge company with modest to non-existent revenue growth that could be relatively range-bound in the long-term. With that being the case, if you are long of VZ shares you are either a long-term dividend investor or you are a trader who bought the stock at the lower end of the established trading range. Is Verizon more attractive now from a valuation perspective now that the stock has pulled back? What are the technicals telling us about VZ stock?The bulls' view of Verizon…• The company sports several “cheap” valuation metrics:o Its enterprise value is far greater than its market capitalizationo Its price-to-sales is 1.64• It has gross (27.53%) and net (12.50%) profit margins that produce annual positive levered free cash flow of $28.29 billion.• Verizon pays out a 4.2% annual dividend to its shareholders• VZ stock still trades above its uptrend line support – which means it gets the benefit of the doubt until that line fails.Meanwhile, the bears see Verizon this way… • Verizon is not cheap at all with a price-to-book ratio of 13.6 (where 3 is “fairly valued” in most cases) and a price-to-earnings ratio of just under 14 while its estimated revenue and earnings growth for 2015 come in at 2.7% and 9.3% respectively.• Verizon carries high levels of debt if you consider its current ratio of 0.86 and its debt-to-equity ratio of 687.26%. • VZ shares are threatening to break down below the uptrend line at around $48 (VZ closed Wednesday at $48.75). Additionally, there appears to be a “head and shoulders” top formation on the verge of trading to fruition with that same potential break of $48.75. Technically speaking…Technicians see Verizon as a market laggard with one last hope of holding support before the chart truly breaks down. If the $47.98 level fails to hold up as support, the stock should accelerate to the downside and support at $46 would become the focus. Only a break and close back above $50.30 would put the bears on the defensive. Overall…Verizon may be a great long candidate in the very near future – but not yet. A continued drop down to $46 would be a great entry target for aspiring longs in the VZ space.